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Formation of the PV industry for over 100-GW introduction

2021.08.26

The Ministry of Economy, Trade and Industry (METI) presented a draft of the Sixth Strategic Energy Plan, which will be the guiding principles of Japan’s future energy policies. This draft of the Strategic Energy Plan shows the roadmap of energy policies toward the realization of 2050 Carbon Neutrality and 46 % reduction in greenhouse gas (GHG) emissions by 2030, in addition to the energy strategies toward the creation of a renewable energy-oriented economic society. The position of the Strategic Energy Plan has changed from the conventional establishment of plans in build-up approaches to the basic planning based on an ambitious outlook which aims to realize higher goals. Therefore, the formulation of the Sixth Strategic Energy Plan is the most difficult and important of all the Strategic Energy Plans established ever.

 

In the target energy mix for FY 2030, the total power generation amount was declined from 1,065 TWh to 930 – 940 TWh by enhancing energy conservation, in which the ratio of nuclear power generation remained the same, while the ratio of thermal power generation was declined.

 

On the other hand, the ratio of renewable energy was largely increased to 36 – 38 % (330 – 350 TWh of power generation amount) from 22 – 24 %, which is expected to accelerate the movement of making renewable energy a mainstream power source. The breakdown of five renewable energy sources is as follows: PV around 15 %, wind around 6 %, geothermal around 1 %, hydro around 10 % and biomass around 5 %.

 

As a policy response to increase the ratios renewable energy sources significantly, METI announced that it will promote the maximum introduction of renewable energy, while reducing the nation’s burden and encouraging the coexistence with local communities under the major premise of S+3E and the newly added principles of “consistent efforts for making renewable energy a mainstream power source” and “giving top priority to renewable energy.” METI’s policy response is based on the backgrounds as follows: 1) Japan must correspond to the global trend of decarbonization without delay; 2) METI has a cost outlook that PV power generation cost will get lower than the nuclear power generation cost and become the least expensive of all the power sources in Japan in 2030; and 3) PV excels in the lead time for introduction.

 

As described above, expansion of PV is desired by far the most among all renewable energy sources and PV grew up to become a mainstream renewable energy source which comprises 40 % of all electricity generated by renewable energy sources, exceeding hydro power generation in both power generation capacity and power generation amount. The PV ratio of around 15 % in the energy mix for 2030 is equivalent to 140 TWh in power generation amount and approximately 110 GW (over 130 GW (DC)) in power generation capacity and the installed capacity is estimated to grow to over 100-GW level.

 

According to the conventional outlook on the PV installed capacity, it is estimated that up to 87.6 GW will be installed under the continuous effort scenario and up to 100 GW under the policy enhancement scenario, in which the related government ministries and agencies are involved. However, these figures are not enough to increase the contribution of PV to 15 %. To achieve the 15 % target, at least 10-GW scale additional introduction is needed. It is necessary for the related government ministries and agencies to concentrate their power of policies, including the regulatory measures they can take, and seek the additional introduction through the promotion of introducing renewable energy in harmony with local communities and self-consumption of generated electricity by private companies. Fortunately, the related government ministries and agencies have started to be involved in the formulation of the draft of the Sixth Basic Energy Plan. It is important that the  related government ministries and agencies join hands to move forward with forming measures and setting introduction targets which will enable over 100-GW introduction, taking advantage of this opportunity.

 

On the other hand, the PV industry has been expanding the businesses aiming to move on to “a new phase” to correspond to the Acts for Establishing Resilient and Sustainable Electricity Supply Systems. For the formulation of the new Strategic Energy Plan, which plans to significantly increase the renewable energy ratio, aiming at 46 % GHG reduction by 2030, the PV industry needs “a new dimensional” response as well.

 

Although the continuous expansion of PV introduction as a national strategy will be a driving force for the PV industry for its development in the future, there is a major premise that the PV industry bears the responsibility as a mainstream power source.

 

In this situation, where the related government ministries and agencies are united with the initiative of METI to form the dissemination measures for the formulation of the Sixth Strategic Energy Plan, the PV industry has to form an industry which is reliable as an energy industry from four aspects as described in Figure 1: 1) Formation of markets: the development of markets which corresponds to the environment of use and installation; 2) Formation of systems: the evolution of technologies, systems and operation formats which corresponds to various applications and patterns of use; 3) Formation of businesses: the establishment of business fields to surely proceed with making PV a mainstream power source and 4) Formation of players: participation from other industries. At the same time, the PV industry must establish the economic rationality with competitiveness as an industry and shift to independent business expansion with the future development potential, at a higher speed than ever.

Now, the responsibility which the PV industry bears is the core of the future energy policies of Japan. As an industry which leads decarbonization in conjunction with the national government, the PV industry shall be a light which will take us to a new era of energy.

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Figure 1  Formation of the PV industry toward achieving over 100 GW installation

Note: Abbreviations of ministries

METI:        Ministry of Economy, Trade and Industry

MoE:         Ministry of the Environment

MAFF:       Ministry of Agriculture, Forestry and Fisheries

MLIT:        Ministry of Land, Infrastructure, Transport and Tourism

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